EUR/USD why to expect pullback ahead of Jackson Hole Symposium?
Updated
Why price action is at risk of retesting 1.1800?
1- U.S. >> employment has risen by an average of about 617,000 people per month so far this year. BUT the total number of Americans who are not working is still more than 5 millions short of 2019 levels.
2- U.S. >> the White House told Congress that it’s “appropriate” for EXPANDED federal unemployment benefits approved in a coronavirus relief bill to expire in about two weeks despite surging Covid-19 cases, or in other words the spread of delta variant could force even states that cut off extra unemployment benefits early to OFFER additional support.
- This means that a discussion to provide the economy with more fiscal support is at risk to be more than a discussion (to approve the offer and start unveiling bills),
risk of more fiscal support + very high inflation + insufficient information about laying out the timing for the Fed's taper (ongoing debate to taper by end of year or to wait for more progress in jobs reports so as to take decision early next year = not to rule out a break above 1.1750 to be capped by a retest at 1.1810 ahead of Jackson Hole Symposium for further guidance on tapering asset purchases -
3- In FOMC meeting minutes, most officials agreed they could start reducing the pace of their bond-buying by the end of the year, now it is just about tweaking the timing, also they felt they had hit their inflation objective and were closer to their goal on reducing unemployment.
- Yes this announcement is good for USD but as long as there was not a whole lot of agreement beyond that, means there is a small chance the taper announcement could be delayed to December to be in process early next year (THAT WOULD BE ENOUGH REASON FOR AT LEAST 1.1800 RETEST) (eyes on Jackson Hole Symposium) -
ADDITIONAL REASONS RELATED TO EUROPE ECONOMIC UPDATES
1- Italy and Spain are set to record the fastest pace of economic expansion this year in more than four decades, a strong rebound that will help the countries overcome last year's recession.
2- EU >> businesses stepped up hiring during the second quarter when a pandemic restrictions started to ease and the economy returned to growth, unemployment increased by 0.5% in the 3 months through June after declining 0.2%.
- The economic outlook is brightening in EU, only because the ECB is being Dovish, extending its bond buying program, raising inflation goal = Such news are good for EUR but are being somehow disregarded due to the ECB policy -
CONCLUSION
- AHEAD OF JACKSON HOLE SYMPOSIUM = PRICE RANGE (1.1650 - 1.1800) HOWEVER IT IS LOW EXPECTED TO TEST A LOWER LOW ON THE WEEKLY FRAME -
- ANY APPROVAL FED TO ANNOUNCE OFFICIAL DATE OF TAPER ( BY THE END OF 2021 ) IN JACKSON HOLE SYMPOSIUM = STRONGER BEARISH STANCE, LOWER LOW ON THE WEEKLY FRAME, SHORT TERM PRICE RANGE WOULD BE 1.1650 - 1.1750, AND A TEST OF 1.1620 WOULD NOT BE RULED OUT BUT LOW EXPECTED -
- CALENDAR AHEAD OF JACKSON HOLE SYMPOSIUM WOULD CAUSE PRICE ACTION VOLATILITY, HOWEVER STILL NEED TO BE EYED -
- THIS OUTLOOK REMAINS ONLY TILL UPCOMING NEWS AND DATA THAT MAY CHANGE THE PRICE RANGE, SO I WILL UPDATE ACCORDINGLY -
1- U.S. >> employment has risen by an average of about 617,000 people per month so far this year. BUT the total number of Americans who are not working is still more than 5 millions short of 2019 levels.
2- U.S. >> the White House told Congress that it’s “appropriate” for EXPANDED federal unemployment benefits approved in a coronavirus relief bill to expire in about two weeks despite surging Covid-19 cases, or in other words the spread of delta variant could force even states that cut off extra unemployment benefits early to OFFER additional support.
- This means that a discussion to provide the economy with more fiscal support is at risk to be more than a discussion (to approve the offer and start unveiling bills),
risk of more fiscal support + very high inflation + insufficient information about laying out the timing for the Fed's taper (ongoing debate to taper by end of year or to wait for more progress in jobs reports so as to take decision early next year = not to rule out a break above 1.1750 to be capped by a retest at 1.1810 ahead of Jackson Hole Symposium for further guidance on tapering asset purchases -
3- In FOMC meeting minutes, most officials agreed they could start reducing the pace of their bond-buying by the end of the year, now it is just about tweaking the timing, also they felt they had hit their inflation objective and were closer to their goal on reducing unemployment.
- Yes this announcement is good for USD but as long as there was not a whole lot of agreement beyond that, means there is a small chance the taper announcement could be delayed to December to be in process early next year (THAT WOULD BE ENOUGH REASON FOR AT LEAST 1.1800 RETEST) (eyes on Jackson Hole Symposium) -
ADDITIONAL REASONS RELATED TO EUROPE ECONOMIC UPDATES
1- Italy and Spain are set to record the fastest pace of economic expansion this year in more than four decades, a strong rebound that will help the countries overcome last year's recession.
2- EU >> businesses stepped up hiring during the second quarter when a pandemic restrictions started to ease and the economy returned to growth, unemployment increased by 0.5% in the 3 months through June after declining 0.2%.
- The economic outlook is brightening in EU, only because the ECB is being Dovish, extending its bond buying program, raising inflation goal = Such news are good for EUR but are being somehow disregarded due to the ECB policy -
CONCLUSION
- AHEAD OF JACKSON HOLE SYMPOSIUM = PRICE RANGE (1.1650 - 1.1800) HOWEVER IT IS LOW EXPECTED TO TEST A LOWER LOW ON THE WEEKLY FRAME -
- ANY APPROVAL FED TO ANNOUNCE OFFICIAL DATE OF TAPER ( BY THE END OF 2021 ) IN JACKSON HOLE SYMPOSIUM = STRONGER BEARISH STANCE, LOWER LOW ON THE WEEKLY FRAME, SHORT TERM PRICE RANGE WOULD BE 1.1650 - 1.1750, AND A TEST OF 1.1620 WOULD NOT BE RULED OUT BUT LOW EXPECTED -
- CALENDAR AHEAD OF JACKSON HOLE SYMPOSIUM WOULD CAUSE PRICE ACTION VOLATILITY, HOWEVER STILL NEED TO BE EYED -
- THIS OUTLOOK REMAINS ONLY TILL UPCOMING NEWS AND DATA THAT MAY CHANGE THE PRICE RANGE, SO I WILL UPDATE ACCORDINGLY -
Note
After yesterday's macroeconomic calendar data, the break above 1.1750 became less expected but STILL on the cards, it is better to close long positions at that critical point, I will explain in next idea.
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